Compromise pricing in luxury

Purpose Going beyond odd and even prices, this paper aims to explore the rationale behind the widespread practice of setting prices ending in “50” or “80” in the luxury industry. The authors argue that when they set such prices, managers agree to reduce their profit margin to limit the anticipated guilt luxury consumers associate with luxury shopping while also protecting their brand luxury. The authors label these prices compromise prices and formally define compromise pricing as the practice of choosing a price’s ending so that the price falls below (but not just below) a round number to boost sales without damaging brand luxury. Design/methodology/approach Following the observation of the overrepresentation of prices ending in “50” and “80” in the luxury clothing category, an experiment explores the impact of compromise prices on anticipated guilt and brand luxury in the luxury watch category. Then, to identify when luxury pricing managers typically favor compromise prices, multinomial regressions investigate prices collected on two online luxury fashion retailers for the luxury clothing and handbag categories. Findings Compromise prices reduce the anticipated guilt luxury consumers associate with luxury shopping compared with even prices while enhancing brand luxury compared with odd prices and interestingly, with even prices also. This finding gives rationale to luxury managers’ preference for compromise prices in the ninth hundred (i.e. €X950, €X980), especially for higher-priced products, i.e. when the potential for price underestimation and/or the risk of damaging brand luxury are more important. Originality/value This research contributes to the field of luxury pricing by providing evidence to an original price-ending practice, coined compromise pricing, which consists in agreeing to a slight reduction in prices and unit margin to protect brand luxury.

The Threshold-Crossing Effect: Just-Below Pricing Discourages Consumers to Upgrade

Managers often set prices just-below a round number (e.g., $39) – a strategy that lowers price perceptions and increases sales. The authors question this conventional wisdom in a common consumer context: upgrade decisions (e.g., whether to upgrade a car or hotel room). Seven studies—including one field study—provide empirical evidence for a threshold-crossing effect. When a base product is priced at or just-above a threshold, consumers are more likely to upgrade and spend more money (studies 1–3) because they perceive the upgrade option as less expensive (study 4), and they place less weight on price (study 5). Testing theoretically motivated and managerially relevant boundary conditions, studies find that the threshold-crossing effect is mitigated under sequential choice (study 6) and when an upgrade price crosses an upper threshold (study 7). These studies demonstrate that a small increase in price on a base product can decrease price perceptions of an upgrade option and, thus, increase consumers’ likelihood to upgrade. It suggests that just-below pricing, while sometimes advantageous at first, may not always be an optimal strategy for managers trying to encourage consumers to ultimately choose an upgrade option.

Speedier Subtractions and Sums

This chapter presents methods to add and subtract numbers more swiftly. These include breaking a subtraction or addition down into two, simpler steps. It also includes a way to add or subtract when the numbers involved fall on either side of a round number, such as 10, 100, or 1,000. These methods rely on two fundamental properties of numbers, namely the associative and commutative laws. Each of the methods presented contains a worked example. Furthermore, an intriguing property of three-digit numbers, involving “mirror numbers” and the number 1,089 is shown and proved. Fifty challenge problems conclude the chapter, to provide practice for the reader.

THE MUSICAL CODE OF ROUND-NUMBER BIRTHDAY CELEBRATIONS FOR SENIORS IN LITHUANIA

This article examines round-number birthday celebrations for people in Lithuania using video recordings uploaded to the internet over the past decade. The focus of attention is birthday celebrations for seniors (age fifty and over). The main goal is to use a structural and semantic approach in order to reveal the cultural and social meanings of celebrations through their musical code.